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Michael Lewis' new book "Flash Boys" has whipped up a furious tornado of criticism about high frequency trading. But the market and regulators need to resist the urge to ban the practice and instead embrace the notion of high frequency monitoring and surveillance.

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International banks and other global private entities need to ensure that they do more than pay lip service to the data privacy laws of sovereign states, writes Andrew Waxman of IBM's consulting practice.

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The SEC’s proposed Regulation SCI is intended to protect market technology from outages and technical glitches. But industry commentators contend the rule doesn’t include all market participants and underestimates the implementation costs. Here are five areas that market participants would like to change.

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Michael Lewis' new book "Flash Boys" has whipped up a furious tornado of criticism about high frequency trading. But the market and regulators need to resist the urge to ban the practice and instead embrace the notion of high frequency monitoring and surveillance.

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With the threat of rising rates on the horizon, banks are relying on existing “technologies” to avert the danger, such as duration risk, VaR and dynamic simulation, writes David Renz of SunGard's Ambit Treasury Management solution.

Former New York City Mayor Michael Bloomberg is not against dark pools, nor does he worry about high frequency trading. In a CNBC interview, Bloomberg weighed in on Wall Street and income inequality along with the controversy over HFT.

Bloomberg is No. 20 on CNBC's list of the top 25 most influential business leaders of the past quarter century, for transforming the way data was shared on Wall Street.

As for what he thinks about HFT and the argument that the stock market is rigged: âThere is always abuse. The system is not rigged,â said Bloomberg. Someone could be hacking into the system right now, or trying to get a trading edge, he conveyed. The way to measure things is to look at the commissions, which are dramatically lower than when he entered the securities industry in the 1960s. Back then, he noted that a $50 trade had a $1.50 commission spread, and today things are measured in thousandths of a penny, which refers to the rebates paid to liquidity providers. Bloomberg said the public is well served and if someone wants to sell 1,000 shares of IBM, there are a host of exchanges and dark pools they can go to.

While Bloomberg is the founder and majority owner of Bloomberg L.P., the first financial information system to bring transparency to the bond markets, he told CNBC, said he was not against dark pools given the lack of transparency. âYou donât have to trade there.â He also said an investor doesnât have to tell everybody what they want to do. If someone comes to them with a bid, they may or may not hit it. But if someone is making an offer, they should make it to everyone.
Here is more from the CNBC interview

Defending Wall Street

While acknowledging that Wall Street has had too many cases of corruption, scandal, breaking the law, theft and not looking out for the customerâs interests, Bloomberg defended the industry: âIn the aggregate, people that work on Wall Street are as good as people that work anyplace else.â He also pointed out that without commercial banks, investment banks, there would be no economy.â Although some Wall Street executives earn millions of dollars per year, Bloomberg said the average person who works on Wall Street makes $70K per year and lives on Main Street and shops on Main Street. âWe are all in this together,â he said, perhaps implying hat all this bashing of Wall Street and its CEOs for their role in the financial crisis, is not productive. While CEOs may regret how they handled things, Bloomberg said these organizations are big and the world is complex and making it simpler wonât work.

On income inequality, Bloomberg blamed the Federal Reserve for pumping a lot of money into the financial system for leading to inflated asset values. He noted, itâs unclear if this has added many jobs. This has exacerbated the income gap between the top 20% rich and the bottom 20% poor. What do you do about it? Bloomberg who is a self-made billionaire summed up with 2 choices: there are those who believe in equal results and those who believe in equal opportunity. Historically, taking from the rich to give to the poor has not worked, he said. Another approach is that people are dealt a set of cards, sometimes they win, sometimes they lose, but at least they are in charge of their own destiny.

ABOUT THE AUTHOR

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in ...

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